A $26 Billion Advisor Focused On Private Capital Growth And Liquidity

Firm: Cresset Asset Management

Name: Avy Stein

Location: Chicago, IL

Team Custodied Assets: $25.9 Billion

Forbes Rankings: America’s Top RIA Firms

Background: Avy Stein grew up in Chicago, first majoring in accounting from the University of Illinois before then getting a law degree from Harvard. Though he started as a lawyer, he quickly pivoted and became an entrepreneur, buying and running various businesses over the decades. He served as CEO of Willis Stein & Partners, a private equity firm he co-founded in 1994, before eventually launching Cresset in 2017 with friend and fellow entrepreneur Eric Becker. The two realized that neither of their family offices were meeting their needs or those of other private equity partners. “The idea behind starting Cresset was to have a business built by clients for clients—and that mean’s uncompromising alignment with clients and true expertise throughout,” says Stein. The firm primarily serves family office clients, but it also focuses on helping young entrepreneurs from the private equity, venture capital or tech worlds. “That group may not have much liquidity yet but we’re doing all sorts of planning and quarterbacking to help them get ready for that.”

Competitive Edge: “The firm’s competitive advantage is our macro strategies, expertise in private markets (which drives most of our growth) and the depth of services we provide for maximizing wealth and optimizing life,” says Stein. He also cites his firm’s focus on community and bringing clients together. Cresset hosts over 100 “lifelong learning” events each year, featuring conversations with the likes of best-selling author Walter Isaacson, actor Matthew McConaughey and ski racer Lindsey Vonn.

Investment Philosophy/Strategy: Stein and his team believe in a smart macro strategy when investing, “with efficient and diversified exposure to public markets,” he says, adding, “we strongly believe in private markets—that’s where the alpha is.” Creating expertise in private markets and investing like a large family office are cornerstones of Cresset’s strategy, says Stein. That view means client portfolios have a much larger allocation to private markets and funds than typical RIA firms as a result, with also a higher percentage of alternative investments.

Investment Outlook: “I think interest rates will be higher for longer than people anticipate and the effect of that will be negative on markets,” predicts Stein. He believes that productivity issues and a potential supply and demand mismatch in the labor market will also likely have some impact on valuations once investors come to grips with that. “When the yield curve inverted we had short-term treasuries—it’s hard not to think about moving more to fixed income, but we’ve been tactical in nature,” says Stein. “On the other side of all this, the promise of productivity brought about by artificial intelligence will be enormous, but that’s further out.”

Biggest Challenge: “So much of success in business relates to culture and people,” says Stein. “Another challenge is not having a model to look at—we’re very different and there aren’t other multi-family offices with an excess of $40 billion in assets and specialized expertise in private markets.” He adds that “sticking to core philosophies” while continuing to build and grow the business is also essential.

Best Advice: Stein’s best advice for clients is to have a sophisticated long term strategy while using deep planning to minimize taxes and focus as much as possible on private markets, where he argues there is a “premium” for illiquidity. “Be diversified, patient and proactive rather than reactive,” says Stein. “We live in this nanosecond world where things are all over the internet and not always factual.”

Favorite Book/Movie/Hobby: Stein cites Mustafa Suleyman’s book The Coming Wave, which warns readers of the potential dangers that could arise from artificial intelligence. His favorite movie is the 1972 classic, The Godfather.